SECURITIES AND EXCHANGE COMMISSION 
                             Washington, D.C. 20549

                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

                   For the Fiscal Year Ended December 31, 1996
                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
              THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

              For the transition period from ________ to __________

                           Commission File No.: 0-5537

                        INVESTMENT PROPERTIES ASSOCIATES
             -----------------------------------------------------
             (Exact Name of Registrant as specified in its charter)

A New York Limited Partnership                        13-2647723
-------------------------------          ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

                  60 East 42nd Street, New York, New York 10165
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:  (212) 687-6400

Securities registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act:

             820,000 Participations in Limited Partnership Interest
             ------------------------------------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

         Yes __X__                            No _____

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained,  to the best of registrant's knowledge, in definitive proxy or
information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
Registrant -- Not applicable.

              APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. 

     Yes_________              No_________

Documents Incorporated by Reference -- Not applicable.

                               Page 1 of __ Pages

<PAGE>
                                     PART I

1.  Business.  

     (a) General  Development  of  Business.  Investment  Properties  Associates
("Registrant")  is a New York limited  partnership  formed pursuant to a Limited
Partnership  Agreement  dated as of May 15, 1969, as amended on October 2, 1969,
October 31, 1969, and December 3, 1969 (the  "Agreement").  On February 4, 1997,
Registrant announced that it was offering its commercial properties for sale.

     On January 4, 1997,  Harry B.  Helmsley,  a General  Partner of Registrant,
died.  Under the terms of the Agreement,  the General  Partners are obligated to
create a new limited  partnership  with the same attributes as Registrant and to
convey all of the assets and  liabilities  of  Registrant  to such entity.  Such
action  would  involve  substantial  expense  and no benefit to the  partners of
Registrant or to the holders of Partnership  Participation  Interests  ("PPIs").
Accordingly,  Registrant intends to seek approval from the holders of a majority
of the PPIs to amend the Agreement to permit the remaining  General  Partners to
elect to  continue  the  business of  Registrant  in the event of the death of a
General  Partner  and to make such  election  with  respect  to the death of Mr.
Helmsley.

     At December 31,  1996,  Registrant  owned  fourteen  commercial  properties
(thirteen of which were operating  properties)  located in metropolitan areas in
Illinois,   New  York,  New  Jersey  and  Texas.  Of  such  fourteen  commercial
properties,  Registrant  owned fee titles to, or  leasehold  estates in,  twelve
commercial  properties,  a 50% interest in one property and a 73-1/3% beneficial
interest in another property. Thirteen of these properties are office  buildings

                                       -2-
<PAGE>

(one of which, located in Midland, Texas, is vacant) and one is a loft building.
In addition,  Registrant  owns fee title to two  unimproved  real  properties in
Houston,  Texas.  On December  20,  1996,  Registrant  agreed to accept an early
surrender of space located at 1440 Broadway, New York, New York due to expire on
December  31,  1999 in  exchange  for a lump  sum  payment  from the  tenant  of
$1,000,000.  This  transaction  was recorded as income in the fourth  quarter of
1996.  In  consideration  of Chase  Manhattan  Bank's  consenting  to the  early
surrender, Registrant agreed to invest at least $1,000,000 in 1997 in connection
with leasing costs and capital  improvements  at 1440  Broadway,  New York,  New
York.

     On May 1, 1996,  Registrant  exercised  its option to terminate  the ground
lease on the 744 Broad Street Building in Newark, New Jersey. As provided in the
lease,  the ground  lessor,  Newark  Building  Associates,  was given sixty days
written notice of Registrant's plan to terminate the ground lease. The lease was
to expire on August 31, 2002.

     On November 30, 1994, Registrant borrowed $6,000,000 from Irving Schneider,
a General Partner of Registrant,  and $12,000,000  from an affiliate of Harry B.
Helmsley,  also a General Partner  (collectively,  the "Affiliate  Loans").  The
Affiliate Loans, which are due and payable on demand,  bear interest at the rate
announced from time to time by Chase Bank,  N.A.  ("Chase") as its "prime rate."
The  proceeds  of the  Affiliate  Loans  were used by  Registrant  (i) to prepay
indebtedness  owed to Chase in the amount of  $10,750,000  (which  amount  Chase
subsequently  readvanced to  Registrant in connection  with the extension of the
mortgage loans relating to 1440  Broadway,  245 Fifth Avenue,  261 Fifth Avenue,
all in New York,  New York,  and One North  Dearborn  and One  LaSalle,  both in
Chicago,  Illinois,  and the cross  collateralization  and cross  defaults among
these properties); (ii) to pay the outstanding accrued interest on the Bonds due
on December 1, 1994 in the amount of $484,000; (iii) to pay

                                       -3-

<PAGE>

outstanding  distribution obligations to the Special Limited Partners in respect
of 1993 net operating revenues,  which were past due since March 31, 1994 in the
amount of  $5,317,000;  and (iv) to reduce a portion  of  Registrant's  accounts
payable  to  trade  creditors  by  approximately  $1,449,000.   Registrant  paid
$1,612,875  in  interest  in  respect of the  Affiliate  Loans  during  1995 and
$1,513,625 in interest thereon during 1996.

     On December 1, 1994,  Chase loaned  $10,750,000 to Registrant,  which funds
were used by Registrant to repay its 9% Junior  Mortgage  Bonds (the "Bonds") in
full on such  date.  Chase  also  agreed to extend  the final  maturity  date of
Registrant's mortgage loans relating to its 1440 Broadway,  245 Fifth Avenue and
261 Fifth Avenue properties in New York, New York, and to its One North Dearborn
and One LaSalle  buildings  in Chicago  (collectively,  the "Chase  Loans") from
January  2, 1995 to  January 2, 1997.  On April 25,  1995  Registrant  and Chase
entered the definitive agreements providing for the extension of the maturity of
the Chase Loans and the cross  collateralization  and cross  defaults  among the
properties  that secure the Chase Loans.  In addition,  the Registrant was given
the option of paying  interest  on the Chase  Loans based on LIBOR plus 2.25% or
prime plus .375%.  The maturity of the Chase Loans has been  extended to January
2, 1998. See Note 4 to Financial Statements.

     During  1996,  Registrant  made  principal  payments of  $3,048,785  in the
aggregate on its first  mortgage  loans  including a $3,000,000 net reduction of
the mortgage  loan held by Chase.  The aggregate  principal  amount of the Chase
Loans at December 31, 1996 was $35,847,488.  The aggregate outstanding principal
balance of the Chase Loans as of December 31, 1995 was $38,847,488.

     On November 13,  1995,  Registrant  and First  Fidelity  Bank  ("Fidelity")
entered  into  a  modification   of  the  mortgage  note  held  by  Fidelity  on
Registrant's Federal Trust building

                                       -4-
<PAGE>

in Newark, New Jersey.  Effective January 1, 1996, the maturity date of the note
was  extended to June 30,  1997.  Interest  on the amended  note is based on the
weekly average yield on U.S.  Treasury  Securities plus 2% and the  modification
calls for the monthly payment of principal and interest.  The principal  balance
of the Fidelity loan at December 31, 1996 was $467,070.

     (b)  Financial  Information  About  Industry  Segments.  Registrant's  sole
business is the  ownership  and  operation of  commercial  real  estate.  All of
Registrant's revenues, operating profit or loss and assets relate solely to such
industry segment.

     (c) Narrative  Description of Business.  Registrant's  only business is the
ownership and operation of commercial real properties which it leases to various
tenants.  Registrant's  principal  source of revenues is rent received from such
tenants.  The primary costs  associated with owning and leasing  commercial real
estate are real estate  taxes,  utilities,  interest on  indebtedness,  property
management  and  leasing  fees,   payroll  and  related  expenses,   repair  and
maintenance expenses and depreciation.  See Financial Statements,  page S-3. All
of the properties owned and operated by Registrant are set forth in Item 2.

     Registrant's  properties  taken as a whole are  leased to large  numbers of
lessees and  Registrant is not  dependent  upon any single  lessee,  the loss of
which would have a material  adverse effect on Registrant.  Due to the nature of
the Registrant's business,  Registrant has only one identifiable market segment,
has no new  products,  uses  no raw  materials,  owns  no  patents,  trademarks,
licenses,  franchises  or  concessions  and  expends  no sums for  research  and
development. No material portion of Registrant's business is seasonal in nature.

     Registrant's needs for working capital are similar to those of other owners
and operators of commercial real property and, generally,  are provided for with
cash generated from operations and, in some cases, borrowings.

                                       -5-

<PAGE>

     Each property owned by Registrant  competes with real properties of similar
function and quality in its geographic  vicinity.  Commercial  rental properties
within a given  geographic  area  tend to  compete  on the  basis  of  location,
amenities and price.  Demand for commercial  rental space is also dependent upon
economic  conditions  prevailing  in the  particular  geographical  area and the
quantity of suitable space in such area.

     Registrant  employs  approximately 150 people who handle maintenance of its
properties.  All of the Registrant's  other operating  functions,  which consist
primarily of property leasing and property management services, are performed by
Helmsley-Spear,  Inc. or affiliates of Helmsley-Spear,  Inc., which entities may
be  deemed  to  be  affiliates  of  Registrant.   Management  fees  and  leasing
commissions charged by Helmsley-Spear,  Inc. aggregated approximately $2,330,400
in 1996,  $2,362,700 in 1995 and  $2,228,000 in 1994.  Additionally,  Registrant
purchases some of its  maintenance  supplies and materials from Deco  Purchasing
Co., Inc. ("Deco"),  affiliate of one of its partners. Such purchases aggregated
approximately  $23,000 in 1996, $13,000 in 1995 and $14,000 in 1994.  Registrant
believes that such services and products are supplied at prices that approximate
those that would be available from non-affiliates. See Item 13.

2. Properties.

     General. At December 31, 1996, Registrant owned fee titles to, or leasehold
estates in,  twelve  commercial  properties,  a 50%  interest in one  commercial
property,  a 73-1/3% beneficial  interest in another commercial property and fee
title to two unimproved real properties  (collectively,  the "Properties").  The
Properties are located in New York, New York; Chicago, Illinois; Midland, Texas;
Houston,  Texas;  and Newark,  New Jersey.  The Properties have a total rentable
area of approximately 4,914,000 square feet.

                                       -6-

<PAGE>

     Substantially all of the commercial Properties have modern lobby facilities
and  automatic  self-service  elevators.  The  Registrant  takes a  depreciation
deduction for tax purposes on the buildings,  building  improvements  and tenant
improvements  on its  properties.  See Schedule III of the Financial  Statements
included elsewhere herein.

                                       -7-

<PAGE>

     The table below sets forth a description of each of the Properties owned by
Registrant on December 31, 1996,  its location,  types of ownership and rentable
area in square feet.  

<TABLE>
<CAPTION>

                                                                                       Total 
                                                                                       Rentable 
                                                                                       Area 
Property                             Description              Ownership                (Sq. Ft.)
--------                             -----------              ---------                ---------
<S>                                 <C>                      <C>                       <C>
New York, New York

1440 Broadway                       25-story office          Fee                       690,000
                                    bldg.

261 Fifth Avenue                    25-story office          Fee                       402,000
                                    bldg.

245 Fifth Avenue                    26-story office          Fee                       287,000
                                    bldg.

Marbridge Building                  11-story office          50% of Fee                357,000
(1328 Broadway)                     bldg.

Mojud Building                      5-story loft             Fee                       181,000
(Long Island City)                  building

Chicago, Illinois

One LaSalle Bldg.                   49-story office          Fee                       491,000
(1 N. LaSalle St.)                  bldg.

360 No. Michigan Avenue Bldg.       21-story office          Leasehold (lease          259,000
(360 No. Michigan Ave.)             bldg.                    expires 4/30/2058)
   
One N. Dearborn Bldg.               17-story office          Fee and Leasehold         938,000
                                    bldg.                    (2 leases expire
                                                             3/31/2020 and
                                                             3/31/2077)

59 E. Van Buren Bldg.               27-story office          Fee                       182,000
                                    bldg.


6 N. Michigan Ave.                  21-story office          73-1/3% beneficial        223,000
</TABLE>

                                       -8-

<PAGE>

<TABLE>
<CAPTION>
                                                                                       Total 
                                                                                       Rentable 
                                                                                       Area 
Property                             Description              Ownership                (Sq. Ft.)
--------                             -----------              ---------                ---------
<S>                                 <C>                      <C>                       <C>
Texas

Midland Savings Bldg.               14-story office          Fee                       167,000
(Midland)                           bldg. (currently
                                    vacant)(1)

Edgewood Shopping Center            Unimproved               Fee                           --
(Houston)                           Land

Bellway Shopping Center             Unimproved               Fee                           --
(Houston)                           Land

New Jersey

Raymond Commerce Bldg.              37-story office          Leasehold (lease          359,000
(1180 Raymond Blvd.,                bldg.                    expires 12/31/03)
Newark)

570 Broad Street (Newark)           14-story office          Fee                       190,000
                                    bldg.(2)

Federal Trust Bldg. (24             20-story office          Fee                       188,000
Commerce St., Newark)               bldg. and 7-story
                                    office bldg.
</TABLE>
--------------------
(1)  Registrant is not  attempting to rent space in such building  since it does
     not believe  that the  building can be operated  profitably  under  current
     market   conditions.   Such  property  is  not  material  to   Registrant's
     operations.

(2)  Vacated by sole tenant during 1996.

                                       -9-

<PAGE>

     Additional   Property   Information.   Four  of   Registrant's   properties
individually account for 10% or more of its total assets or revenues at December
31, 1996. Such properties are referred to above as 1440 Broadway,  New York, New
York;  261 Fifth  Avenue,  New  York,  New York;  One North  Dearborn,  Chicago,
Illinois and One North LaSalle, Chicago, Illinois.

     The estimated  occupancy rate for the Registrant's  1440 Broadway  property
for 1996,  1995,  1994, 1993 and 1992 was  approximately  61%, 73%, 70%, 71% and
73%,  respectively.  The average annual base rent per leased square foot at such
property was  approximately  $28.10 in 1996,  $23.94 in 1995, $24.57 in 1994 and
$24.85 in 1993.

     The estimated occupancy rate for the Registrant's 261 Fifth Avenue property
for 1996,  1995,  1994, 1993 and 1992 was  approximately  80%, 78%, 72%, 74% and
82%,  respectively.  The  average  rental per square foot at such  property  was
approximately $21.28 in 1996, $21.25 in 1995, $20.49 in 1994 and $20.70 in 1993.

     The  estimated  occupancy  rate for the  Registrant's  One  North  Dearborn
property for 1996,  1995, 1994, 1993 and 1992 was  approximately  47%, 54%, 62%,
68% and 77%,  respectively.  The average rental per square foot at such property
was  approximately  $16.25 in 1996, $16.44 in 1995, $16.47 in 1994 and $18.47 in
1993.

     The estimated occupancy rate of Registrant's One North LaSalle property for
1996,  1995, 1994, 1993 and 1992 was  approximately  58%, 54%, 56%, 56% and 62%,
respectively.   The  average  rental  per  square  foot  at  such  property  was
approximately $11.80 in 1996, $13.80 in 1995, $13.69 in 1994 and $17.37 in 1993.

     Registrant's  1440  Broadway  property  is a  25  story  commercial  office
building in midtown,  Manhattan.  Two separate tenants occupy 10% or more of the
rental area of such building,  both of which are clothing retailers.  The rental
per annum of one clothing retailer is

                                      -10-
<PAGE>

$4,641,000  and  its  lease  expires  on  December  31,  1999,  subject  to  two
consecutive five year renewal options to 2004 and 2009 at then prevailing market
rentals.  The rental per annum of the other clothing  retailer is $2,349,000 per
year and such lease expires on May 31, 1998, with no renewal options.

     Registrant's  261 Fifth Avenue  property is a 25 story building  located in
midtown Manhattan. No single tenant of such property occupies 10% or more of the
rentable area of such property.

     Registrant's One North Dearborn  property has one tenant that occupy 10% or
more of the rentable area of such property, a commercial bank. Effective January
31, 1997 a portion of the space with an annual  rental of $425,000  was vacated.
The remaining  portion of the bank's space, with an annual rental of $4,341,000,
has a portion  expiring  January 31, 2000 and a portion  expiring April 30, 2000
without any renewal options.

     Registrant's  One North LaSalle property has one tenant, a commercial bank,
that leases 10% or more of the rentable  area of such  property.  Such  tenant's
annual rental is $1,480,000 per year and the lease expires on December 31, 2000,
without renewals.

     The  Chicago  and New  York  commercial  real  estate  markets  are  highly
competitive.  In recent years,  this has resulted in reduced occupancy rates and
lower  rentals  per square  foot at  Registrant's  properties  in these  cities.
Although this trend is anticipated to continue,  Registrant believes that rental
rates  remain  high  enough  to  operate  these  properties  profitably  for the
foreseeable future, although there can be no assurances in this regard.

                                      -11-
<PAGE>

     The  following  table  sets  forth  certain  information  concerning  lease
expirations for the Registrant's principal properties at December 31, 1996:

                                  1440 Broadway
<TABLE>
<CAPTION>

                        Number of           Total Leased                               % of
                     Tenants whose             Area in                             Gross Annual
     Year          lease will expire         Square Feet       Annual Rental          Rental
     ----          -----------------         -----------       -------------          ------
     <S>                   <C>                  <C>             <C>                     <C> 
     1997                  10                   11,377          $   305,580             2.6%
     1998                  14                  102,172            2,962,776            25.2%
     1999                   7                  181,742            4,858,224            41.4%
     2000                   3                    2,587               56,220             0.5%
     2001                   2                   23,641              806,556             6.9%
     2002                   1                    1,789               37,569             0.3%
     2003                   1                      318               26,669             0.2%
     2004                   1                    2,000              230,772             2.0%
     2005                   4                   13,884              873,966             7.4%
 2006 or later              2                   78,206            1,578,612            13.4%
                           --                  -------          -----------           ------
    Totals                 45                  417,716          $11,736,944           100.0%
                           ==                  =======          ===========           ======
</TABLE>
                                      -12-

<PAGE>

                                261 Fifth Avenue


<TABLE>
<CAPTION>

                        Number of           Total Leased                               % of
                     Tenants whose             Area in                             Gross Annual
     Year          lease will expire         Square Feet       Annual Rental          Rental
     ----          -----------------         -----------       -------------          ------
     <S>                   <C>                  <C>             <C>                    <C> 
    1997                   24                   70,436          $1,566,192             23.6%
    1998                    8                   33,254             560,736              8.4%
    1999                   14                   55,706           1,215,312             18.3%
    2000                   11                   29,570             647,268              9.7%
    2001                   10                   38,837             890,340             13.4%
    2002                    6                   23,813             512,580              7.7%
    2003                    1                    5,777             121,028              1.8%
    2004                    2                   27,282             518,076              7.8%
    2005                    1                   10,322             221,551              3.3%
2006 or later               1                   17,225             390,246              5.9%
                           --                  -------          ----------            ------
   Totals                  78                  312,222          $6,643,329            100.0%
                           ==                  =======          ==========            ======
</TABLE>
                                                  
                               One North Dearborn

<TABLE>
<CAPTION>

                        Number of           Total Leased                               % of
                     Tenants whose             Area in                             Gross Annual
     Year          lease will expire         Square Feet       Annual Rental          Rental
     ----          -----------------         -----------       -------------          ------
     <S>                   <C>                  <C>             <C>                    <C> 

    1997                   6                    135,544         $1,508,723             22.8%
    1998                   3                     12,311            567,430              8.6%
    1999                   1                        626             25,008              0.4%
    2000                   3                    252,841          4,217,664             63.7%
    2001                   0                          0                  0              0.0%
    2002                   1                      3,850            154,000              2.3%
    2003                   0                          0                  0              0.0%
    2004                   0                          0                  0              0.0%
    2005                   2                      2,480            152,412              2.3%
    2006 or la0er          0                         0       
                          --                    -------         ----------            ------
  Totals                  16                    407,652         $6,625,237            100.0%
                          ==                    =======         ==========            ======
   
</TABLE>

                                      -13-

<PAGE>

                                One North LaSalle
<TABLE>
<CAPTION>

                        Number of           Total Leased                               % of
                     Tenants whose             Area in                             Gross Annual
     Year          lease will expire         Square Feet       Annual Rental          Rental
     ----          -----------------         -----------       -------------          ------
     <S>                   <C>                  <C>             <C>                    <C> 
     1997                  21                     37,563           630,828             21.0%
     1998                  10                     22,616           353,706             11.4%
     1999                  15                     37,723           320,856             10.4%
     2000                   4                    154,400         1,620,684             52.4%
     2001                   1                      2,638            42,576              1.4%
     2002                   1                      2,597            34,774              1.1%
     2003                   0                          0                 0              0.0%
     2004                   0                          0                 0              0.0%
     2005                   0                          0                 0              0.0%
     2006 or later          1                      4,626            69,384              2.2%
                           --                    -------        ----------            ------
         Totals            52                    262,163        $3,092,808            100.0%
                           ==                    =======        ==========            ======
</TABLE>

                                      -14-

<PAGE>

3. Legal Proceedings.

     There are no material  pending legal  proceedings to which  Registrant is a
party or of which any of Registrant's property is the subject.

4. Submission of Matters to a Vote of Security Holders.

     No  matters  were  submitted  to a vote of  holders of PPIs at a meeting or
otherwise during the fourth quarter of 1996.

                                     PART II

5.  Market for the Registrant's Participation Interests
    and Related Security Holder Matters.

     As discussed above, Registrant is a limited partnership.  Participations in
Limited Partnership  Interest or "PPIs", which represent the beneficial interest
of the  Registrant's  sole Limited Partner,  are traded in the  over-the-counter
market on the National  Association of Securities  Dealers Automated  Quotations
System  ("NASDAQ") under the symbol "IVPA." There is no regular market for these
securities and quotations are limited and sporadic.

     The  range  of  high  and  low  closing  bid  quotations  for  PPIs  in the
over-the-counter market for the two most recent years were as follows:

                             1996                               1995
                     --------------------               --------------------
                     High             Low               High             Low
                     ----             ---               ----             ---
First Qtr.            36              33                46               38
Second Qtr.           46              32                46               35
Third Qtr.            45              39 1/2            41               30
Fourth Qtr.           45 1/4          36 1/2            37               30

     The foregoing over-the-counter quotations represent prices between dealers,
do not include retail  mark-up,  mark-down or commission and may not necessarily
represent actual transactions.

                                      -15-

<PAGE>

     As of December 31, 1996,  there were 651 holders of record of Participation
Interests.

     Pursuant to the Limited  Partnership  Agreement,  Registrant is required to
make certain  cash  distributions  to holders of  Participation  Interests.  Net
operating  revenues for each calendar year are  distributable to the partners of
Registrant as follows:

                  General Partners (as a group):                  1.5%
                      Harry B. Helmsley*
                      Irving Schneider
                      Helmsley-Noyes Company, Inc.
                      Minlyn, Inc.

                  Special Limited Partners (as a group):         48.5%
                      Leona M. Helmsley
                      Irving Schneider

                  Limited Partner (nominee for
                  holders of Partnership
                  Participation Interests):                      50.0%

--------------------
* Mr. Helmsley died on January 4, 1997.

     The  Limited  Partner  is the  nominee  for the  holders  of  Participation
Interests and all  distributions to the Limited Partner are distributed  ratably
to the  holders  of  820,000  Participation  Interests.  If with  respect to any
calendar year the Limited  Partner's  distributive  share  (computed on the same
basis as that used in  preparing  Registrant's  Federal  income  tax  return) of
income (loss),  plus one-half of such partner's  distributive share of long-term
capital gains, exceed the net operating revenue allocated to the Limited Partner
as referred to in the preceding paragraph,  then Registrant must also distribute
additional funds in an amount equal

                                      -16-
<PAGE>

to such excess to the holders of Participation Interests. If Registrant does not
have  funds  for  such  distribution  (from  cash on hand  or  borrowings),  the
Partnership Agreement obligates the General Partners to lend or contribute funds
to Registrant for such purpose.

     In  1996,   Registrant  had  "net  operating   revenues"  (as  defined)  of
$8,342,911,  of which  $5,241,297 in the  aggregate (or $6.39 per  Participation
Interest,  $.53 of which, for financial reporting purposes,  represents a return
of capital) was  distributed to the holders of record as of December 31, 1996 of
Participation  Interests.  An  aggregate  of  $5,241,297  in respect of 1996 net
operating revenues is required to be distributed to the Special Limited Partners
and General  Partners  identified  above.  The  Special  Limited  Partners  have
deferred receipt of their distributions in respect of net operating revenues for
1994,  1995 and 1996.  See  Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations.

     In 1995,  Registrant  had net operating  revenues of  $9,857,034,  of which
$5,203,216 was distributed to holders of  Participation  Interests (or $6.35 per
Participation  Interest,  $.50  of  which,  for  financial  reporting  purposes,
represented a return of capital) and the same aggregate amount, receipt of which
has been deferred,  is distributable to the Special Limited Partners and General
Partners.  See  "Management's  Discussion  and Analysis of Financial  Condition,
Results of Operations -- Liquidity and Capital Resources."

     "Net operating revenues" is defined in Registrant's  partnership  agreement
as follows:  for any year, (i) net taxable income of the  Registrant,  plus (ii)
depreciation and amortization  expenses allowable for income tax purposes during
such  year  (but  only  to  the  extent  of  mortgage  repayments),  (iii)  plus
amortization  of Bond issuance  costs and Bond  discount  (which is not relevant
after 1994),  (iv) plus  amortization  of financing  costs,  (v) less  principal
repayments on mortgages.  Because certain of  Registrant's  properties are fully
depreciated for

                                      -17-

<PAGE>

tax  purposes,  the net  operating  revenues of  Registrant  in recent years has
exceeded cash available for distribution to Registrant's partners. This trend is
anticipated to continue. Consequently,  Registrant may have to borrow additional
funds or sell properties to fund such distributions of net operating revenues in
the future.  In  addition,  Registrant's  Special  Limited  Partners and General
Partners  have  deferred  receipt of their  portion  of 1994,  1995 and 1996 net
operating revenues. See "Item 7 below."

                                      -18-

<PAGE>

6. Selected Financial Data.
<TABLE>
<CAPTION>

                               1996          1995         1994           1993         1992
                               ----          ----         ----           ----         ----
<S>                        <C>           <C>           <C>           <C>           <C>  
Income Statement
Data
      
Gross revenues from        $52,216,081   $53,879,055   $52,739,194   $55,663,069   $57,905,539
real estate

Income before                8,452,069     9,331,341     8,702,453     9,369,900     8,949,453
extraordinary credit
transferred to Partners'
capital accounts

Extraordinary credit -            --            --            --            --           2,473
Income arising from
repurchase of 9%
Junior Mortgage
Bonds

Net Income transferred       8,452,069     9,331,341     8,702,453     9,369,900     8,951,926
to Partner's capital
accounts

Net operating                8,342,911     9,857,034    10,212,572    11,406,150    11,626,046
revenues, as defined

Net income per
Participation Interest:

Income before                   5.8636        5.8446        5.4269        6.6122        6.2048
extraordinary credit

Extraordinary credit              --            --            --            --           .0015
                           -----------   -----------   -----------   -----------   -----------

Net Income                 $    5.8636   $    5.8446   $    5.4269   $    6.6122   $    6.2063

Balance Sheet Data

Total assets               $55,521,358   $55,061,349   $55,524,560   $54,562,430   $57,902,637

Mortgages payable          $40,314,558   $43,363,342   $46,408,730   $43,656,775   $46,721,651

9% Junior Mortgage                --            --            --     $10,750,000   $16,750,000
Bonds

Chase Interim Loan                --            --            --     $ 6,000,000          --

Affiliate Loans            $18,000,000   $18,000,000   $18,000,000          --            --

</TABLE>

                                      -19-
<PAGE>

7.   Management's  Discussion and Analysis of Financial Condition and Results of
     Operation.

     Liquidity and Capital Resources:

     Historically,  Registrant's  income for operations  has been  sufficient to
provide for its expenses.  From time to time,  however,  Registrant has borrowed
funds to meet its short  term  liquidity  needs.  Registrant  believes  that its
properties are not overly leveraged and that, under normal market conditions, it
will be able to obtain additional financing as needed. Alternatively, Registrant
may sell assets to discharge its  obligations.  On February 4, 1997,  Registrant
announced that it was offering its commercial  properties for sale. There can be
no assurances, however, that a sale will be concluded.

     Registrant is required to make certain cash  distributions  to its Partners
for each year. See "Item 5." Distributions to holders of Participation Interests
in respect of 1994, 1995 and 1996 net operating  revenues were provided for with
cash from  operations.  The General and Special  Limited  Partners have deferred
receipt of their portion of  distributions in respect of 1994, 1995 and 1996 net
operating  revenues.  Registrant  believes  that  distributions  to  holders  of
Participation  Interests of net operating revenues for 1996 will be provided for
with cash from operations. Registrant also believes that the General and Special
Limited Partners will, if necessary,  defer receipt of their entitlement to 1997
net  operating   revenues  to  accommodate  the  Registrants   liquidity  needs.
Registrant  does not  know,  however,  whether  or not such  persons  will  make
additional  loans to the  Registrant to finance such  distributions.  Registrant
anticipates  satisfying  its working  capital  requirements  for 1997  generally
through  cash  from the  operations  and  additional  short-term  borrowings  or
mortgage refinancings and/or the sale of properties.

                                      -20-

<PAGE>

     Net cash provided by operating  activities was approximately  $12.8 million
in 1996 as compared to $11.2 million in 1995 and $11.6 million in 1994.  For the
year ended December 31, 1996, such higher levels were primarily  attributable to
lower   operating   expenses.   Net  cash  used  in  financing   activities  was
approximately  $8.3 million in 1996 as compared to $8.4 million in 1995 and $6.9
million in 1994. Net cash used in investing  activities was  approximately  $2.4
million in 1996 as  compared to $3.8  million in 1995 and $3.0  million in 1994.
Mortgages payable  decreased to approximately  $40.3 million in 1996 as compared
to $43.4  million in 1995 and  approximately  $46.4  million at the end of 1994,
primarily due to scheduled mortgage principal payments.

     On November 30, 1994, Registrant borrowed $6,000,000 from Irving Schneider,
a General Partner of Registrant,  and $12,000,000  from an affiliate of Harry B.
Helmsley,  also a General Partner pursuant to the Affiliate Loans. The Affiliate
Loans  bear  interest  at the rate  announced  from time to time by Chase as its
"prime rate" and are due and payable on demand.  The  proceeds of the  Affiliate
Loans were used by Registrant  (i) to prepay  indebtedness  owed to Chase in the
amount of $10,750,000 (which amount Chase subsequently  readvanced to Registrant
in  connection  with the  Letter of Intent as  defined  below);  (ii) to pay the
outstanding  accrued interest on the Bonds due on December 1, 1994 in the amount
of $484,000;  (iii) to pay outstanding  distribution  obligations to the Special
Limited Partners in respect of 1993 net operating revenues,  which were past due
since March 31, 1994 in the amount of $5,317,000;

                                      -21-

<PAGE>

and (iv) to reduce a portion of Registrant's accounts payable to trade creditors
by approximately $1,449,000.

     On December 1, 1994,  Chase loaned  $10,750,000 to Registrant,  which funds
were used by  Registrant  to repay the Bonds in full on such  date.  Chase  also
agreed to extend the final maturity date of Registrant's mortgage loans relating
to  three of its New  York  properties  and to its One  North  Dearborn  and One
LaSalle buildings in Chicago  (collectively,  the "Chase Loans") from January 2,
1995 to January 2, 1997.  On April 25, 1995,  Registrant  and Chase entered into
definitive  agreements  providing for the extension of the maturity of the Chase
Loans and the cross collateralization and the defaults among the properties that
secure the Chase  Loans.  The  maturity of the Chase Loans has been  extended to
January 2, 1998.

     Registrant has agreed with its lender to invest at least $1,000,000 in 1997
at its 1440 Broadway  property in New York.  See  "Business".  Registrant has no
present  material  commitments  for any other capital  expenditures in excess of
normal  business  requirements  and  does  not  anticipate  incurring  any  such
commitments through 1997.

     The charges to operations  for  depreciation  represent  the  allocation of
historical  costs and are  significantly  less  than if they  were  based on the
current cost to replace the Registrant's  properties.  Registrant,  however,  is
prohibited by the Limited Partnership Agreement from replacing its properties.

     Seven of Registrant's properties are encumbered by first mortgages,  six of
which require payments of interest at variable rates. Consequently,  if interest
rates on such variable rate  mortgages were to increase,  Registrant  could have
less funds available for distribution to holders of Participation Interests.

     Results of Operations:

                                      -22-
<PAGE>

1996 Compared to 1995

     Gross revenues from rentals  (which  included a $1 million lump sum payment
from  a  tenant  for  early   termination  of  its  lease)  for  1996  decreased
approximately 3.2% as compared to 1995,  primarily due to the following factors.
Firstly, decreased occupancy rates at Registrant's Chicago and Newark properties
have had an adverse  affect on revenues.  Secondly,  Registrant  terminated  the
ground  lease at 744 Broad  Street  effective  July 1, 1996 which  resulted in a
decline  in  revenue.  Net  income  for 1996  decreased  approximately  $879,000
(approximately  10%) primarily due to the decrease in gross  revenues  mentioned
above and a one time charge for loss on  abandonment of real estate at 744 Broad
Street,  Newark, New Jersey.  Other property expenses decreased by approximately
$444,000  primarily  as a result of a decrease in real estate  taxes,  decreased
leasehold rentals paid by Registrant and lower interest on indebtedness.

     During 1996  approximately  seventeen tenants in various properties with an
aggregate  annualized  rental of  approximately  $255,964 vacated their premises
prior to the  expiration of their  leases.  In February  1996,  the tenant which
occupied 92% of the building  located at 570 Broad  Street,  Newark,  New Jersey
notified  management  of its  intention  not to renew  its lease  which  expired
December 31, 1996.  While leasing  activity has recently been more active in New
York,  it  remains  relatively  flat in Chicago  and down in Newark.  Tenants of
Registrant  have been able to negotiate lease renewals at rates lower than prior
levels.  Although Registrant  anticipates continuing its practice of negotiating
new leases and renewing others, Registrant believes more of its space may become
vacant as a result of additional  tenants going out of business,  reducing their
space  requirements  or  relocating.  In the  competitive  markets  in which the
Registrant's  properties are located,  it is often  difficult to find acceptable

                                      -23-

<PAGE>

replacement  tenants,  even at lower rents. These trends have adversely affected
Registrant's results in 1996 and could continue to adversely affect Registrant's
results in 1997. At December 31, 1996,  Registrant did not have any  receivables
associated with such vacancies.

     For  1996   Registrant's   interest   expense   decreased   to   $4,879,233
(approximately  10%),  primarily  due to lower  levels  of  average  outstanding
indebtedness.

     Registrant's  real estate tax expense in 1996  totalled  $9,883,375,  which
represents a decrease of  approximately  6% over amounts  expensed in 1995. This
decrease is attributable  primarily to decreases in real estate  assessments for
certain of the properties.  Registrant, under certain commercial leases, is able
to pass a portion of the increases in real estate taxes,  operating expenses and
increases in the consumer  price index to the tenants based on lease  escalation
clauses.

     Management  fees  decreased  approximately  3% in 1996 as compared to 1995,
primarily  due to lower  gross  revenues  from  rentals.  Depreciation  expenses
decreased  approximately  1% in 1996 as compared to 1995,  primarily  due to the
fact that certain of Registrant's  properties  became fully depreciated by 1995.
Other operating  expenses decreased  approximately 2% in 1996,  primarily due to
lower property taxes and interest expense.

1995 Compared to 1994

     Gross  revenues  from  rentals  for 1995  increased  approximately  2.2% as
compared to 1994,  primarily due to the receipt of $950,000 in connection with a
settlement  with a major tenant at one of the  Registrant's  Newark  properties,
which tenant vacated the premises prior to its scheduled lease  expiration.  Net
income for 1995 increased  approximately  $628,888 primarily due to the increase
in gross revenues  mentioned above.  Other property expenses  increased $562,234
primarily  as a result of an  increase  of  utilities  expense of  approximately
$385,384.

                                      -24-

<PAGE>

     During  1995  approximately  25  tenants  in  various  properties  with  an
aggregate  annualized  rental of  approximately  $754,000 vacated their premises
prior  to the  expiration  of  their  leases.  Although  Registrant  anticipates
continuing  its  practice  of  negotiating  new  leases  and  renewing   others,
Registrant  believes  more  of its  space  may  become  vacant  as a  result  of
additional  tenants going out of business,  reducing their space requirements or
relocating.  In the competitive markets in which the Registrant's properties are
located, it is often difficult to find acceptable  replacement tenants,  even at
lower rents. These trends have adversely affected  Registrant's  results in 1995
and could continue to adversely affect Registrant's results in 1996. At December
31,  1995,  Registrant  did  not  have  any  receivables  associated  with  such
vacancies.

     For  1995   Registrant's   interest   expense   increased   to   $5,394,017
(approximately  14.9%),  primarily due to higher  levels of average  outstanding
indebtedness.

     Registrant's  real estate tax expense in 1995 totalled  $10,496,407,  which
represents a decrease of approximately  7.8% over amounts expensed in 1994. This
decrease is attributable  primarily to decreases in real estate  assessments for
certain of the properties.  Registrant, under certain commercial leases, is able
to pass a portion of the increases in real estate taxes,  operating expenses and
increases in the consumer  price index to the tenants based on lease  escalation
clauses.

     Management fees decreased  approximately  3.1% in 1995 as compared to 1994,
primarily  due to lower  gross  revenues  from  rentals.  Depreciation  expenses
decreased  approximately 8.9% in 1995 as compared to 1994,  primarily due to the
fact that certain of Registrant's  properties  became fully depreciated by 1994.
Other operating expenses increased  approximately 4.8% in 1995. This increase is
attributable primarily to higher utilities costs.

                                      -25-
<PAGE>



8. Financial Statements and Supplementary Data.

     The  response  to this Item is  submitted  in a  separate  section  of this
report.

                                      -26-
<PAGE>

9.   Changes in and  Disagreements  With Accountants on Accounting and Financial
     Disclosure.

       None.

                                    PART III

10.  General  Partners  of the  Registrant.  (a) (b)  Identification  of General
     Partners.

     Registrant  is a  limited  partnership.  It  does  not  have  directors  or
executive officers.  The information set forth below is provided with respect to
the  General  Partners  of the  Registrant,  who  may be  considered  to  occupy
positions  equivalent to directors or executive  officers.  There is no specific
term of office for any General Partner of the  Registrant.  Each General Partner
has served in such capacity since December 4, 1969.

     The names, ages, and business  experience during the past five years of the
two individual  General  Partners of the  Registrant,  including their principal
occupations  and  employment  during  that  period  and the name  and  principal
business of any corporation or other  organization in which such occupations and
employment were carried on, is as follows:

     Irving Schneider - 77; Executive Vice President of Helmsley-Spear, Inc. Mr.
Schneider  has been in the real estate  business  for over 50 years and owns and
operates,   individually   or  through   partnerships,   numerous   real  estate
investments.

     Helmsley-Noyes Company, Inc. (formerly Charles F. Noyes Company, Inc.), was
incorporated  in 1926.  It is a major real  estate  management  firm in New York
City, managing approximately 25 properties. It is owned by Helmsley Enterprises,
Inc., which in turn is wholly-owned by the Harry B. Helmsley Revocable Trust, of
which Leona M. Helmsley is the beneficiary.

                                      -27-
<PAGE>

     Minlyn,  Inc.  was  formed  in  1968.  All of its  stock  is  owned  by Mr.
Schneider.  There is no family  relationship  between the two individual General
Partners.  Mr.  Schneider is a director of Reliance  Group  Holdings,  Inc., and
Reliance Insurance Company.

     Harry B. Helmsley was a General  partner of  Registrant  until his death on
January 4, 1997.

11. Executive Compensation.

     (a) General,  (b) Summary Compensation Table, (c) Options/SAR Grants Table,
(d) Aggregate  Option/SAR  Exercises and Fiscal Year-End Option/SAR Value Table,
(e) Long-Term  Incentive  Plan ("LTIP")  Awards  Table,  (f) Defined  Benefit or
Actuarial  Plan  Disclosure,  (g)  Compensation  of  Directors,  (h)  Employment
Contracts and Termination of Employment and Change-in-Control  Arrangements, (i)
Additional  Information  with Respect to Compensation  Committee  Interlocks and
Insider Participation in Compensation Decisions.

     Registrant is a limited partnership.  It does not have officers,  executive
officers or directors.  The information set forth below is provided with respect
to the General Partners and the Special Limited Partners of the Registrant,  who
may  be  considered  to act in  capacities  similar  to  directors,  or  perform
policy-making  functions  similar to those of executive  officers or officers in
charge of a principal business unit, division or function.

     Paragraph 11A(3) of the Limited Partnership  Agreement provides for certain
guaranteed  payments to be made to the  General  Partners  and  Special  Limited
Partners of Registrant  equal to 8-3/4% per annum of their  "Remaining  Original
Cash Contribution." The Remaining Original Cash Contribution is $1,500,000, less
the cumulative  amounts  distributed to the General Partners and Special Limited
Partners  from  time to time in  respect  of the  net  proceeds  of the  sale of
Registrant's properties. The Remaining Original Cash Contribution as

                                      -28-
<PAGE>

of December 31, 1996 was $1,160,000 For the fiscal years ended December 31, 1996
and December 31, 1995,  Registrant  paid or accrued,  pursuant to such paragraph
11A(3),  guaranteed  payments to the General and Special Limited  Partners in an
aggregate  amount of $101,500 as follows:  Harry B.  Helmsley - $67,566,  Irving
Schneider - $33,732,  Helmsley-Noyes  Company,  Inc. - $101, and Minlyn,  Inc. -
$101.

     Under the terms of the  Limited  Partnership  Agreement,  since  January 1,
1973,  the General  Partners are entitled to receive an annual  payment equal to
1/2% of the gross operating  income of Registrant.  During the fiscal year ended
December 31, 1996, Registrant accrued in connection with such annual payments an
aggregate of $261,499 as follows: Harry B. Helmsley - $165,618, Irving Schneider
- $78,449,  Helmsley-Noyes  Company,  Inc. - $8,716 and  Minlyn,  Inc. - $8,716.
During the fiscal year ended December 31, 1995, Registrant accrued in connection
with such annual payments an aggregate  amount of $267,919 as follows:  Harry B.
Helmsley - $169,682, Irving Schneider - $80,379,  Helmsley-Noyes Company, Inc. -
$8,929 and Minlyn,  Inc. - $8,929. The total accrual to the General Partners and
their affiliates in 1996 and 1995 in respect of their Original Cash Contribution
and right to 1/2% of gross operating  income were as follows:  Harry B. Helmsley
and his affiliate is $411,896 and $246,278,  respectively;  Irving Schneider and
his  affiliates - $201,588 and $123,139,  respectively.  Mr.  Schneider  also is
entitled to receive  distributions of net operating  revenues in his capacity as
Special Limited Partners. See "Item 5" above.

     The Registrant does not provide any compensation to the General Partners or
the other  persons  in the form of option or stock  appreciation  right  grants,
long-term  incentive  plans,  or a  defined  benefit  or  actuarial  plans.  The
Registrant has no standard arrangements for

                                      -29-
<PAGE>

payment of fees  General  Partners  (other  than for their  interest  as General
Partners,  as described  above),  or employment  contracts or  change-in-control
arrangements.

12.  Security Ownership of Certain
     Beneficial Owners and Management.

     (a)  Registrant  is a limited  partnership.  Except to the extent set forth
below, it does not have voting securities.  The right to control the business of
Registrant  is  vested  in the  General  Partners  of  Registrant  by  virtue of
provisions of Paragraph 20A of the Limited  Partnership  Agreement and Article 8
of the New York Partnership Law.

     Paragraph 31 of the Limited Partnership Agreement provides for modification
or amendments of the Limited  Partnership  Agreement upon obtaining the consents
or  affirmative  votes of specified  percentages  of the General  Partners,  the
Special Limited Partners,  and the Limited Partners,  each voting as a class. To
the  extent  that  the  General  Partnership  Interests,   the  Special  Limited
Partnership Interests,  and the Participation Interests are considered as voting
securities  by virtue of the  provisions  of said  Paragraph  31, the  following
information  is  provided  as to  holders  of 5% or more of each  such  class of
securities at December 31, 1996:

                                                       Amount and
                                                       Nature of
                         Name and Address of           Beneficial       Percent
Title of Class           Beneficial Owner              Ownership        of Class
--------------           ----------------              ---------        --------
General Partnership      Harry B. Helmsley               --             63.33(1)
Interests                36 Central Park So.           Direct (4)    
                         New York, New York                          
                                                                     
                         Irving Schneider                --             30.00(1)
                         880 Fifth Avenue              Direct (4)  
                         New York, New York     

Special Limited          Leona M. Helmsley               --             66.66
Partnership Interest                                   Direct (4)      

                                      -30-
<PAGE>

                                                       Amount and
                                                       Nature of
                         Name and Address of           Beneficial       Percent
Title of Class           Beneficial Owner              Ownership        of Class
--------------           ----------------              ---------        --------
                         Irving Schneider                --             33.34
                                                      Direct (4)     
                                                                     
Participation            Leona M. Helmsley            258,877           31.57(2)
Interests                Direct (2)                                  
                                                                     
                         Harry B. Helmsley            23,500             2.87(3)
                                                      Indirect (3)   
                                                                     
                         Irving Schneider             90,095            10.99
                                                      Direct (5)     
                                                                     
                         John D. and Catherine T      87,000            10.61
                         MacArthur Foundation c/o     Direct         
                         Cyrus Smith                                
                         Chief Financial Officer
                         Foundation Land Company
                         4176 Burns Road
                         Palm Beach Garden, FL
                         33410-4653
---------------
(1)  The   remaining   6.67%  of  General   Partnership   Interests  are  owned,
     beneficially and of record, by Helmsley-Noyes  Company,  Inc., 22 Cortlandt
     Street, New York, New York and Minlyn, Inc., 60 East 42nd Street, New York,
     New York. See Item 10 hereof as to ownership of said corporations.

(2)  Leona M. Helmsley is the spouse of Harry B. Helmsley who died on January 4,
     1997. Above amount excludes the 23,500 PPIs that were owned beneficially by
     Mr. Helmsley.

(3)  Includes:  4,000 PPIs held by Helmsley-Noyes Company, Inc. (.5%), a company
     owned by Helmsley  Enterprises,  Inc., which in turn is wholly-owned by the
     Harry B. Helmsley Revocable Trust, under agreement dated December 13, 1989;
     13,000 PPIs held by HBH Holdings  Corp.  (1.6%) and 6,500 PPIs held by Park
     Lane  Hotel,   Inc.   (.8%).   See  Item  10  hereof  as  to  ownership  of
     Helmsley-Noyes  Company,  Inc. HBH Holdings Corp. and Park Lane Hotel, Inc.
     are  wholly-owned  by  Helmsley  Enterprises,  Inc.  Mrs.  Helmsley  is the
     executor of the estate of Harry B. Helmsley and is the  beneficiary  of the
     Revocable  Trust.  Consequently,  Mrs.  Helmsley  may be  deemed  to be the
     beneficial owner of such securities.

                                      -31-

<PAGE>

(4)  The  General  Partnership  Interests  and the Special  Limited  Partnership
     Interests  have the rights set forth in the Limited  Partnership  Agreement
     and are not  reflected  in any  number or amount  of  securities  issued by
     Registrant. Mr. Helmsley died on January 4, 1997.

(5)  Does not include 31,960  Participation  Interests owned by Mr.  Schneider's
     daughters (3.9%).

     (b)  Registrant is a limited  partnership.  It does not have  directors and
officers. The following table sets forth the amount and nature of the beneficial
ownership  at December 31, 1996 of  Registrant's  three  classes of  partnership
interests by its two individual General Partners and by all its General Partners
as a group:

                                                    Amount and
                                                    nature of
                           Name and Address of      Beneficial       Percent
Title of Class             Beneficial Owner         Ownership        of Class
--------------             ----------------         ---------        --------
General Partnership        Harry B. Helmsley        --                 63.33
Interests                  36 Central Park So.      Direct (3)
                           New York, NY

                           Irving Schneider         --                 30.00
                           880 Fifth Avenue         Direct (3)
                           New York, NY

                           As a group                                 100.00 (1)

Special Limited            Leona M. Helmsley        --                 66.66
Partnership Interests                               Direct (3)

                           Irving Schneider         --                 33.34
                                                    Direct (3)

                           As a group                                 100.00

Participation Interests    Harry B Helmsley         23,500              2.87
                                                    Indirect (2)(5)

                           Irving Schneider         90,095             10.99
                                                    Direct (4)

                           As a group               113,595(2)(4)      13.86(2)
                                                                        (4)

                                      -32-
<PAGE>

---------------
(1)  The   remaining   6.67%  of  General   Partnership   Interests  are  owned,
     beneficially and of record, by Helmsley-Noyes  Company,  Inc., 22 Cortlandt
     Street, New York, New York and Minlyn, Inc.; 60 East 42nd Street, New York,
     New York. See Item 10 hereof as to ownership of said corporations.

(2)  Includes:  4,000 PPIs held by Helmsley-Noyes Company, Inc. (.5%), a company
     owned by Helmsley  Enterprises,  Inc., which in turn is wholly-owned by the
     Harry B. Helmsley Revocable Trust, under agreement dated December 13, 1989;
     13,000 PPIs held by HBH Holdings  Corp.  (1.6%) and 6,500 PPIs held by Park
     Lane Hotel,  Inc. (.8%).  HBH Holdings Corp. and Park Lane Hotel,  Inc. are
     wholly-owned by Helmsley Enterprises, Inc. Mrs. Helmsley is the executor of
     the estate of Harry B.  Helmsley  and is the  beneficiay  of the  Revocable
     Trust. Consequently, Mrs. Helmsley may be deemed to be the beneficial owner
     of such securities.

(3)  The  General  Partnership  Interests  and the Special  Limited  Partnership
     Interests  have the rights set forth in the Limited  Partnership  Agreement
     and are not  reflected  in any  number or amount  of  securities  issued by
     Registrant. Mr. Helmsley died on January 4, 1997.

(4)  Does not include 31,960  Participation  Interests owned by Mr.  Schneider's
     daughters (3.9%).

(5)  Does  not  include  258,877  Participation  Interests  owned  by  Leona  M.
     Helmsley.

 13.  Certain Relationships and Related
      Transactions.

     (a) Transactions with Management and Others.

     (b) Certain Business Relationships.

     As set forth in Item 11(a) above,  during the year ended  December 31, 1996
Registrant  paid  certain  fees and certain  guaranteed  payments to each of its
corporate  General  Partners,  Helmsley-Noyes  Company,  Inc. and Minlyn,  Inc.,
pursuant  to the  Limited  Partnership  Agreement.  See Item 10 hereof as to the
ownership of said corporations.

     Helmsley-Spear, Inc., either directly or through various subsidiaries, acts
as managing agent of the Properties.  For such management and leasing  brokerage
services,   Helmsley-Spear,   Inc.  charged  Registrant  the  aggregate  sum  of
approximately $2,330,429 during the fiscal year ended December 31, 1996. Leasing
commissions charged by Helmsley-Spear,

                                      -33-
<PAGE>

Inc.  are based upon  varying  percentages  of the  annual  rent paid by tenants
obtained  by   Helmsley-Spear,   Inc.   Property   management  fees  charged  by
Helmsley-Spear,  Inc. are based upon negotiated  amounts that are believed to be
below  market  rate.  Leasing  fees and  property  management  fees  charged  by
Helmsley-Spear,  Inc.  to  Registrant  are  believed  to be,  from  Registrant's
perspective,  on a basis  that  approximate  those that  would be  available  to
Registrant from non-affiliates at arm's-length.  Mr. Helmsley, a General Partner
of the  Registrant,  is the indirect owner of  substantially  all of the capital
stock  of   Helmsley-Spear,   Inc.  and  Mr.   Schneider  is  a  stockholder  of
Helmsley-Spear,  Inc. and is the Executive Vice  President of that company.  The
amount of the commissions paid for such services is believed by Registrant to be
no more than the amount which  Registrant  would be required to pay to unrelated
parties performing such services.

     Registrant  purchases some of its  maintenance  supplies and materials from
Deco  Purchasing  Co. Inc.,  an affiliate of one of its  partners.  During 1994,
Registrant  also borrowed $18 million from Irving  Schneider and an affiliate of
Harry Helmsley pursuant to the Affiliate Loans. See Item 1(a) above.

     (c)  Indebtedness of Management.
          None.


                                     PART IV

14.  Exhibits, Financial Statement
     Schedules, and Reports on Form 8-K.

     (a) (1) and (2) The  response to this  portion of Item 14 is submitted as a
separate section of this report.

                                      -34-

<PAGE>

     (a) (3)  Exhibits.  Subject to Rule  12b-32 of the  Securities  Act of 1934
regarding  incorporation  by reference,  listed below are the exhibits which are
filed as part of this report  (according to the numbers assigned to them in Item
601 of Regulation S-K):

      (3)      (i) Registrant's  Limited  Partnership  Agreement dated as of May
               15, 1969,  as amended on October 2, 1969  October 31,  1969,  and
               December 3, 1969 is hereby  incorporated by reference to Exhibits
               3.1, 3.2, 3.3 and 3.4 to Registration Statement No. 2-33132 which
               was declared effective by the SEC on December 4, 1969.

      (10.1)   Management  Agreement dated May 20, 1969 between  Helmsley-Spear,
               Inc.  and  Registrant  is hereby  incorporated  by  reference  to
               Exhibit 12.1 to Registration  Statement No. 2-33132.  The leasing
               commissions  and management  fees currently  being charged to the
               Registrant are consistent with the rates generally charged in the
               areas where the properties are located.

      (10.2)   Forms of Promissory  Notes,  dated November 30, 1994,  evidencing
               the  Affiliate  Loans is  hereby  incorporated  by  reference  to
               Exhibit 10.2 of  Registrant's  Report on Form 10-K for the fiscal
               year ended December 31, 1994.

      (b)      Reports  on Form 8-K filed  during  the  period  covered  by this
               Report:

                       None.

      (c)      Exhibits -- None.

       d)      Financial  Statement Schedules -- The response to this portion of
               Item 14 is submitted as a separate section of this report.

                                      -35-
<PAGE>
 
     (27) Financial Data Schedule

                                      -36-

<PAGE>

                           Annual Report On Form 10-K

                      Item 14(A)(1) And (2) And Item 14(D)

          List Of Financial Statements And Financial Statement Schedule

              Financial Statements And Financial Statement Schedule

                           Year Ended December 31,1996

                        Investment Properties Associates
                        (A New York Limited Partnership)

                               New York, New York

<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

         Index Of Financial Statements And Financial Statement Schedule

The  following  financial  statements of Investment  Properties  Associates  are
included in Item 8:

                                                                         Page

Report of Independent Auditors............................................S-1
Balance Sheets - December 31, 1996 and 1995...............................S-2
Statements of Income - Years Ended December 31, 1996,
1995 and 1994.....................................................S-3 and S-4
Statements of Changes in Partners' Capital (Deficiency)-
Years Ended December 31, 1996, 1995 and 1994..............................S-5
Statements of Cash Flows - Years Ended December 31, 1996,
1995 and 1994.............................................................S-6
Notes to Financial Statements.....................................S-7 to S-16


The following financial statement schedule of Investment  
Properties  Associates is included in Item 14(d):

Schedule III-Real Estate and Accumulated Depreciation...........S-17 and S-18

All other  schedules for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related  instructions,  are inapplicable or have been otherwise  disclosed,  and
therefore have been omitted.

<PAGE>

                         Report of Independent Auditors

Investment Properties Associates

We have  audited  the  accompanying  balance  sheets  of  Investment  Properties
Associates  (a New York Limited  Partnership)  as of December 31, 1996 and 1995,
and the related statements of income,  changes in partners' capital (deficiency)
and cash flows for each of the years in the three year period ended December 31,
1996. Our audits also included the financial  statement  schedule  listed in the
index  at  Item  14(a).   These  financial   statements  and  schedule  are  the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  financial  position  of  Investment   Properties
Associates at December 31, 1996 and 1995,  and the results of its operations and
its cash flows for each of the years in the three year period ended December 31,
1996, in conformity with generally accepted accounting principles.  Also, in our
opinion,  the related financial statement schedule,  when considered in relation
to the  basic  financial  statements  taken as a whole,  presents  fairly in all
material respects the information set forth therein.

New York, New York
April 2, 1997

                                      S-1
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                                 Balance Sheets

                                                      1996              1995 
                                                  ------------------------------
Assets                                                                
Real estate, at cost (Notes 3 and 5)              $138,214,361     $141,282,613 
    Less accumulated depreciation and                                           
       amortization                                 95,710,079       97,003,567 
                                                  ------------------------------
                                                    42,504,282       44,279,040
                                                                             
Cash and cash equivalents                            5,187,591        3,090,409 
                                                                                
Due from managing agent (Helmsley-
    Spear Inc.) including tenants'
    security deposit of $1,587,384 
    (1996) and $1,398,781 (1995) (Note 6)            2,081,585        2,740,657
                                                                                
Receivables, principally for rentals                 1,443,576        1,282,917 
                                                                     
Deferred Charges,  including  deferred  
    leasing commissions of $3,225,134 
    (Notes 8 and 9) (1996) and 
    $3,470,607 (1995) (Note 6)                       4,304,324        3,668,320
                                                  ------------------------------
Total assets                                      $ 55,521,358     $ 55,061,349 
                                                  ==============================

Liabilities and partners' capital (deficiency)                            
Accounts payable                                  $  2,755,221     $  2,529,484
Accrued real estate taxes                            4,630,585        4,564,270
Accrued interest                                       396,153          434,526
Distributions payable to General Partners,               
   Special Limited Partners and Limited        
     Partner (Note 9)                               20,889,097       15,609,719
Guaranteed payments due to General                                          
   Partners, Special Limited Partners and                                 
     Limited Partner (Note 7)                          393,000          384,420 
Accrued leasing commissions and                                                 
    management fees due to Helmsley-                                            
    Spear, Inc. (Note 6)                             1,216,015          514,839 
Sundry and accrued liabilities                       1,830,035        2,759,273 
Notes payable to related parties                                                
   (Note 4)                                         18,000,000       18,000,000 
Mortgages payable (Note 5)                          40,314,558       43,363,342 

Deposits and rents received in advance of                                       
   $96,613 (1996) and $103,007 (1995)                1,946,639        1,720,896 
                                                  ------------------------------
Total liabilities                                   92,371,303       89,880,769 
                                                  ------------------------------
Contingencies (Note 13)
Partners' Capital (Deficiency) 
   (Notes 8 and 9)
       General Partners                             (8,388,913)      (7,597,996)
       Special Limited Partners                    (44,098,397)     (43,291,921)
       Limited Partner (represented by                                          
         the equivalent of 820,000                                              
         Participation Interests)                   15,637,365       16,070,497 
                                                  ------------------------------
                                                   (36,849,945)     (34,819,420)
                                                  ------------------------------
Total liabilities and partners'                                                 
   capital (deficiency)                           $ 55,521,358     $ 55,061,349 
                                                  ==============================
                                                   
See accompanying notes.                                            


                                      S-2
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                              Statements of Income

                                                   Year ended December 31,
                                              1996          1995        1994
                                         ---------------------------------------
Revenues:          
Gross revenues from real estate (Note 12)  $52,216,081  $53,879,055  $52,739,194
Interest and other income                       74,663      109,309       68,674
                                           -------------------------------------
                                            52,290,744   53,988,364   52,807,868
                                           -------------------------------------
                                           
Expenses:                                  
  Leasehold rentals (Note 11)                  929,787    1,258,903    1,265,265
  Real estate taxes                          9,883,375   10,496,407   11,386,800
  Interest, on mortgages and notes           
     payable                                 4,879,233    5,394,017    4,693,669
  Management fees (Note 6)                   1,460,004    1,506,896    1,555,575
  Payroll and related expenses               5,208,172    5,379,123    5,164,684
  Repairs and maintenance expenses           3,530,972    2,964,873    2,469,067
  Other property expenses                   11,753,758   12,198,128   11,635,894
  Administrative expenses                      236,072      195,661      230,825
  Co-owners' share of (expense) income          53,766       75,638       34,671
  Depreciation and amortization of           
     real estate                             3,447,071    3,487,384    3,827,709
  Amortization of leasing commissions        1,128,228    1,127,422    1,075,970
  Amortization of deferred expenses of    
     issuance of 9% Junior Mortgage               --           --         19,739
     Bonds                                 
  Amortization of discount on 9%           
     Junior Mortgage Bonds                        --           --         75,978
  Amortization of mortgage                 
     refinancing costs                         184,266      188,152      286,273
                                           -------------------------------------
                                            42,694,704   44,272,604   43,722,119
                                           -------------------------------------
Income before items shown below              9,596,040    9,715,760    9,085,749
                                           -------------------------------------
Loss on abandonment of real estate (Note 3)    765,972         --          --
                                           -------------------------------------

See accompanying notes.


                                      S-3
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                        Statements of Income (continued)


                                            Year ended December 31,
                                    1996              1995             1994
                               -------------------------------------------------
Guaranteed payments
  required under the
  Limited Partnership
  agreement (Note 7):
To the Limited Partner           $   15,000       $   15,000        $   15,000
To General and Special                                        
  Limited Partners                  101,500          101,500           101,500
To General Partners                 261,499          267,919           266,796
                                 ---------------------------------------------
                                    377,999          384,419           383,296
                                 ---------------------------------------------
                                                                   
Net income                       $8,452,069       $9,331,341        $8,702,453
                                 =============================================
                                                                   
Net income allocable as                                        
follows: (Note 8)                                                  
                                                                   
General Partners                 $ (633,678)      $  136,162        $  127,572
                                                                   
Special Limited Partners          4,277,582        4,402,586         4,124,818
                                                                   
Limited Partner                   4,808,165        4,792,593         4,450,063
                                 ---------------------------------------------
                                 $8,452,069       $9,331,341        $8,702,453
                                 =============================================
                                                                   
Net Income Per Limited                                        
  Partner Participation                                              
  Interest (820,000 units                                        
  outstanding):                  $   5.8636       $   5.8446        $   5.4269
                                 =============================================
                                                               
See accompanying notes.


                                      S-4
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

             Statements of Changes in Partners' Capital (Deficiency)
<TABLE>
<CAPTION>

                                                                                      Special       
                                                                     General          Limited         Limited
                                                     Total          Partners          Partners        Partner
                                              ---------------------------------------------------------------------

<S>                                              <C>               <C>              <C>              <C>         
 Partners' Capital (Deficiency)
   December 31, 1993                              $(31,942,988)    $(7,548,077)     $(41,677,865)    $17,282,954

 Distribution to General Partners,
   Special Limited Partners and
   Limited Partner (Note 9)                        (10,503,794)       (157,557)       (5,094,340)     (5,251,897)
 Net income for the year ended
   December 31, 1994                                 8,702,453         127,572         4,124,818       4,450,063
                                              -------------------------------------------------------------------
 Partners' Capital (Deficiency)
   December 31, 1994                               (33,744,329)     (7,578,062)      (42,647,387)     16,481,120

 Distribution to General Partners,
   Special Limited Partners and
   Limited Partner (Note 9)                        (10,406,432)       (156,096)       (5,047,120)     (5,203,216)
 Net income for the year ended
   December 31, 1995                                 9,331,341         136,162         4,402,586       4,792,593
                                              -------------------------------------------------------------------
 Partners' Capital (Deficiency)
   December 31, 1995                               (34,819,420)     (7,597,996)      (43,291,921)     16,070,497

 Distribution to General Partners,
   Special Limited Partners and
   Limited Partner (Note 9)                        (10,482,594)       (157,239)       (5,084,058)     (5,241,297)
 Net income for the year ended
   December 31, 1996                                 8,452,069        (633,678)        4,277,582       4,808,165
                                              -------------------------------------------------------------------
 Partners' Capital (Deficiency)
   December 31, 1996                              $(36,849,945)    $(8,388,913)     $(44,098,397)    $15,637,365
                                              ===================================================================

</TABLE>

See accompanying notes.


                                      S-5
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                            Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                      Year ended December 31,
                                                                1996          1995            1994
                                                            ------------------------------------------


<S>                                                             <C>              <C>               <C>          
Operating activities:
Net income                                                   $ 8,452,069   $ 9,331,341    $  8,702,453
Adjustments to reconcile net income to net cash
   provided by operating activities:
        Depreciation and amortization                          4,759,565     4,802,958       5,285,669
Loss on abandonment of real estate                               765,972
Changes in operating assets and liabilities:
Due from managing agent                                          659,072      (501,119)        141,652
Receivables                                                     (160,659)       29,618        (377,287)
Deferred charges, net                                         (1,948,498)   (1,089,557)     (1,241,032)
Accounts payable                                                 225,737      (594,366)     (1,442,492)
Accrued real estate tax                                           66,315      (449,205)       (141,281)
Accrued interest                                                 (38,373)     (100,058)        188,086
Guaranteed payments due to General Partners
   Special Limited Partners and Limited Partner                    8,580         8,672         (11,702)
Accrued leasing commissions and management fees                  701,176       (29,374)       (379,131)
Sundry and accrued liabilities                                  (929,238)     (224,877)        767,080
Deposits and rents received in advance                           225,743         6,561          98,590
                                                             -----------------------------------------
Net cash provided by operating activities                     12,787,461    11,190,594      11,590,605
                                                             -----------------------------------------

Investing activities:
    Property improvements                                     (2,438,279)   (3,827,196)     (2,457,354)
    Land additions                                                  --            --          (502,032)
                                                             -----------------------------------------
Net cash used in investing activities                         (2,438,279)   (3,827,196)     (2,959,386)
                                                             -----------------------------------------

Financing activities:
Distributions of net operating revenues to General
  Partners, Special Limited Partners and Limited
  Partner                                                     (5,203,216)   (5,366,517)    (10,897,406)
Principal payments on mortgages payable                       (3,048,784)   (3,045,388)     (3,248,045)
Proceeds from short-term note                                       --            --        18,000,000
Repurchase of 9% Junior Mortgage Bonds                              --            --       (10,750,000)
                                                             -----------------------------------------
Net cash used in financing activities                         (8,252,000)   (8,411,905)     (6,895,451)
                                                             -----------------------------------------

(Decrease) increase in cash and cash equivalents               2,097,182    (1,048,507)      1,735,768

Cash and cash equivalents at beginning of year                 3,090,409     4,138,916       2,403,148
                                                             -----------------------------------------
Cash and cash equivalents at end of year                     $ 5,187,591   $ 3,090,409    $  4,138,916
                                                             =========================================

Supplemental disclosure of cash flow information
Cash paid during the year for interest                       $ 4,917,606   $ 5,494,075    $  4,505,583
                                                             =========================================
</TABLE>

See accompanying notes.


                                      S-6
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                          Notes to Financial Statements

                                December 31, 1996

1. Description of Business

Investment  Properties Associates ("IPA") was formed as a limited partnership on
May 15, 1969 to acquire and operate commercial properties.  The General Partners
are Mr. Harry B. Helmsley and Mr. Irving Schneider and two corporations owned or
controlled by them; the Special Limited Partners are Mrs. Leona M. Helmsley, Mr.
Irving Schneider and the Limited Partner is Mr. John Bailey.  Undivided economic
interests in the limited  partnership are  represented by 820,000  Participation
Interests.

On January 4, 1997 Harry B. Helmsley  died.  Under the terms of the  partnership
agreement the general partners are obligated to create a new limited partnership
substantially the same as IPA and convey all assets and liabilities to the newly
formed  entity.  On April 2, 1997 the  remaining  general  partner filed a proxy
seeking the consent of a majority of the holders of  participation  interests to
continue the business of IPA without a formal change in partnership entity.

Following Mr. Helmsley's death, IPA announced,  on February 5, 1997, that all of
the  properties  included in the portfolio  are  available for sale.  Management
believes that the  estimated  fair market  value,  less cost of disposal,  is in
excess of the carrying amount of each property.

     2. Significant Accounting Policies

    a.  The  preparation  of financial  statements in conformity  with generally
        accepted accounting principals requires management to make estimates and
        assumptions  that affect the reported  amount of assets and  liabilities
        and disclosure of contingent  assets and  liabilities at the date of the
        financial  statements and the reported  amounts of revenues and expenses
        during the  reporting  period.  Actual  results  could differ from those
        estimates.

    b.  Depreciation  of buildings and building  improvements is provided for by
        the straight-line  method over estimated useful lives of 19 to 39 years.
        Leaseholds,   leasehold   improvements  and  tenants'   alterations  are
        amortized over the terms of the related  leases.  Amounts  applicable to
        tenants'  alterations  and  the  related  accumulated  amortization  are
        eliminated  from the accounts at the time the related  lease expires or,
        if the tenant  should  vacate the premises  prior  thereto,  unamortized
        assets are charged to operations at that time.


                                      S-7
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)


2. Significant Accounting Policies (continued)

    c.  The  discount  on and the  deferred  expenses of issuance of  9%  Junior
        Mortgage Bonds were amortized over the term of the Bonds.

    d.  Costs in connection with mortgage refinancings are included in "Deferred
        Charges-Other"  and are being  amortized  over the terms of the  related
        mortgages.

    e.   Leasing commissions are amortized over the terms of the related leases.

    f.  IPA's employees are covered under  multi-employer  defined  contribution
        pension  plans.  All  contributions  are  funded  currently  based  upon
        negotiated union contracts.  Information from the plans'  administrators
        is not available to permit IPA to determine its share of unfunded vested
        benefits.  During 1996, 1995 and 1994 IPA paid  approximately  $750,000,
        $820,000, and $771,000,  respectively,  for employees to union plans for
        pension, welfare and other benefits.

    g.  For the purpose of  determining  cash  equivalents,  IPA  considers  all
        highly liquid  investments with a maturity of three months or less, when
        purchased, to be cash equivalents.

    h.  FASB  Statement  No. 121  Accounting  for the  Impairment  of Long Lived
        Assets and for Long-Lived Assets to be Disposed Of, requires  impairment
        losses to be  recorded on  long-lived  assets  used in  operations  when
        indicators  of  impairment  are present and the  undiscounted  cash flow
        estimates  to be  generated  by those  assets are less than the  asset's
        carrying  amount or on  long-lived  assets held for sale when the assets
        carrying  amount is  greater  then the fair  market  value less costs of
        disposal for those assets on a property by property basis.

    i.  Certain  balances in the 1995 and 1994 financial  statements  have  been
        reclassified to conform to the current year presentation.


                                      S-8
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

3. Real Estate

Real estate  excludes  co-owners'  shares in two properties and is summarized as
follows:

                      Classification                  1996              1995    
--------------------------------------------------------------------------------
      Land                                        $ 21,940,529      $ 21,940,529
      Buildings and building improvements           81,232,202        80,670,065
      Leaseholds and leasehold improvements         22,010,223        25,536,212
      Tenants' alterations                          13,031,407        13,135,807
                                                  ------------------------------
                                                  $138,214,361      $141,282,613
                                                  ==============================
                                                              
On July 1, 1996 IPA terminated  the ground lease at the property  located at 744
Broad Street in Newark, New Jersey in accordance with the terms of the lease. In
connection  therewith,  IPA surrendered the  improvements on the property to the
lessor  incurring a loss on  abandonment of real estate of $765,972 for the year
ended December 31, 1996.

During  1992 and  1993,  IPA  received  approximately  $6,495,000  of  insurance
proceeds with respect to flood damage incurred at the One LaSalle  Building.  As
of December 31, 1996 IPA has completed the necessary  repairs in connection with
the flood damage.

On March 15, 1994,  IPA  purchased the land  underlying  the property at the 570
Broad Street  Building for  approximately  $500,000.  In December  1996, a major
tenant occupying  approximately  92% of the building's gross leaseable area left
the building upon expiration of its lease.

4. Notes Payable

On November 30, 1994, affiliates of the General Partners loaned IPA $18,000,000,
evidenced by two promissory  notes (the "Notes") in the amount of $6,000,000 and
$12,000,000.  Such  Notes  were used to (1)  prepay  indebtedness  owed to Chase
Manhattan Bank, N.A. ("Chase") in the amount of $10,750,000 (see Note 5) (2) pay
the  outstanding  accrued  interest on the Bonds (see below) (3) pay outstanding
distribution  obligations  to the Special  Limited  Partners and (4) to reduce a
portion of accounts  payable.  Concurrently,  IPA entered into an agreement with
Chase whereby Chase  advanced  $10,750,000  on December 1, 1994. The proceeds of
the Chase loan was used to retire the Junior  Mortgage  Bonds  which  matured on
December 1, 1994. In connection  with the  agreement,  IPA caused the indenture,
pursuant to which the Bonds were originally  issued,  to be assigned to Chase as
additional collateral.


                                      S-9
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

4. Notes Payable (continued)

The affiliate notes bear interest at a variable rate based on Chase's prime rate
and are payable on demand. Interest expense for the year ended December 31, 1996
with respect to the Notes was $1,513,625.

5. Mortgages Payable

As of December 31, 1996 mortgages payable consist of the following:

<TABLE>
<CAPTION>


                                                       Interest                         Balance       Balance
                                                         Rate                         Outstanding   Outstanding
                                                    at December 31,     Maturity        December      December
    Description                                          1996             Date          31, 1996      31, 1995
    -------------------------------------------------------------------------------------------------------------
    <S>                                                  <C>            <C>           <C>           <C>     
    Chase Manhattan Bank (1)
    Mortgage loans with variable interest rates
       collateralized by:         
    1440 Broadway, N.Y., N.Y.                            7.88%          01/02/98      $16,442,428   $17,796,425
    261 Fifth Avenue, N.Y., N.Y.                         7.88%          01/02/98       10,307,810    10,867,810
    245 Fifth Avenue, N.Y., N.Y.                         7.88%          01/02/98        9,097,250     9,617,250
    One North Dearborn, Chicago Ill.                     7.88%          01/02/98             --         566,002
    One North LaSalle, Chicago, Ill.                     7.88%          01/02/98             --            --

    Apple Bank for Savings
    Mortgage loan in the amount of $8,000,000
      with fixed interest payments collateralized
      by 1328 Broadway Building N.Y., N.Y. (in
      which IPA has a 50% tenancy in common
      interest)                                          7.75%          11/24/97        4,000,000     4,000,000

    First Fidelity Bank (2):
    Mortgage loans with fixed interest
      collateralized by the Federal Trust
      Building in Newark, N.J.                          7.375%           6/30/97          467,070       515,855
                                                                                      -------------------------
                      Total                                                           $40,314,558   $43,363,342
                                                                                      =========================
</TABLE>


                                      S-10
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

5. Mortgages Payable (continued)

(1)  IPA executed a Note  Modification  Agreement (the "Agreement") on April 25,
     1995  with  Chase   Manhattan   Bank  ("Chase")   whereby   mortgage  loans
     collateralized  by five of IPA's  properties;  1440  Broadway,  NY, NY, 261
     Fifth  Avenue,  NY, NY,  245 Fifth  Avenue,  NY,  NY,  One North  Dearborn,
     Chicago,  IL and One North LaSalle,  Chicago, IL were generally modified to
     provide for: (a) an extension of the maturity date until January 2, 1997 at
     which time all outstanding  principal and interest is due and payable,  (b)
     interest  based on LIBOR plus  2.25% or Prime  plus  .375% at IPA's  option
     subject to certain  limitations  as  defined  in the  Agreement,  (c) cross
     default and cross collateralization provisions for the five properties, (d)
     IPA's guaranty of $6,000,000 of the outstanding  principal balance, and (e)
     the  following  principal  payments  prior to maturity  with respect to the
     mortgage  loans;  March 15, 1996 - $1,000,000,  June 15, 1996 - $1,000,000,
     September 15, 1996 - $500,000 and December 15, 1996 - $500,000.

     On December  20, 1996 IPA accepted an early  surrender of space  located at
     1440  Broadway,  New York,  New York, in exchange for an early  termination
     payment of $1,000,000 which was recorded as income at December 31, 1996. In
     consideration of Chase consenting to the early  termination,  IPA agreed to
     invest $1,000,000 during 1997 for leasing costs and capital improvements at
     1440 Broadway.

     On  March  28,  1997 a First  Modification  to the  Agreement  (the  "First
     Modification")  was made  between  IPA and  Chase.  The  maturity  date was
     extended  through the earlier of (a) January 2, 1998,  (b) May 30, 1997, if
     IPA does not provide evidence of the ratification of the Agreement,  or (c)
     the first date on which IPA fails to make a  scheduled  principal  payment.
     The four additional  scheduled principal payments of the mortgage loans are
     to be made as  follows;  March  15,  1997 -  $1,000,000,  June  15,  1997 -
     $1,000,000,  September  15,  1997  -  $500,000,  and  December  15,  1997 -
     $500,000.

(2)  On  November  13,  1995,  the  terms of the First  Fidelity  Bank loan were
     modified.  The modification  which is effective January 1, 1996 (a) extends
     the maturity date until June 30, 1997,  (b) provides for variable  interest
     at the weekly average yield on U.S.  Treasury  Securities  plus 2%, and (c)
     provides for monthly payment of principal and interest.

     Principal maturities with respect to mortgages payable through December 31,
     2000 are as follows:


                             1997             $  7,467,070
                             1998               32,847,488
                                              ------------
                            Total             $ 40,314,558
                                              ============
                      

                                      S-11
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

5. Mortgages Payable (continued)

(3) The carrying  amounts of IPA's borrowings under  mortgages and notes payable
approximate their fair value.

6. Management of Properties

The properties are managed by Helmsley-Spear, Inc. and Mr. Harry B. Helmsley and
Mr.  Irving  Schneider,  respectively,  are the  President  and  Executive  Vice
President of  Helmsley-Spear,  Inc., and Mr. Helmsley owns  substantially all of
its outstanding  stock.  In addition to providing  general  property  management
services,  Helmsley-Spear,  Inc.  locates tenants and negotiates  leases for its
properties.   Management  fees  and  leasing   commissions  charged  to  IPA  by
Helmsley-Spear,  Inc. aggregated  approximately  $2,330,429 (1996),  $2,362,700,
(1995)  and  $2,228,000  (1994).   Additionally,   IPA  purchases  some  of  its
maintenance supplies and materials from Deco Supplies Co. ("Deco"), an affiliate
of one of its partners.  Such purchases aggregated  approximately $23,000 (1996)
$13,000, (1995) and $14,000 (1994).

Tenants' security deposits for certain properties are held by the managing agent
principally in special bank accounts;  interest thereon accrues  principally for
the benefit of the tenants.

7. Guaranteed Payments Due to Partners

The Limited  Partnership  Agreement requires that certain guaranteed payments be
made to partners and deducted as expenses in determining net income. The General
Partners and Special  Limited  Partners  receive  guaranteed  payments  equal to
8-3/4% per annum of their "Remaining Original Cash Contribution"  ($1,160,000 at
December 31, 1996,  1995, and 1994). In addition,  the General  Partners receive
guaranteed payments equal to 1/2% of gross revenues,  as defined and the Limited
Partner receives $15,000 per annum.


                                      S-12
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

8. Allocations of Partnership Income

In accordance with the terms of the Limited Partnership  Agreement,  elements of
income for financial  reporting  purposes are credited (but not  distributed  in
cash) to the  capital  accounts of the  partners as follows  (see Note 8 for the
basis on which cash distributions are determined):

                                                                 Special 
                                                        General  Limited Limited
                                                        ------------------------
A. Net income before items C, D, E and F below             1.5%   48.5%   50.0%
B. Net losses, before items below                        100.0%
C. Depreciation and amortization of real estate:
       1.  Equal to mortgage amortization (as defined)
                                                           1.5%   48.5%   50.0%
       2.  Balance                                         3.0%   97.0%
D. Bond discount amortization                                            100.0%
E. Gain on disposition of property:
       1.  To the extent of the aggregate depreciation
           and amortization of such property included
           in C(2) above                                   3.0%   97.0%
       2.  Balance                                         1.5%   48.5%   50.0%
F. Loss on disposition of property                       100.0%

9. Cash Distributions

Net Operating Revenues,  as defined,  are distributable at the discretion of the
General Partners, as follows:


                General Partners                       1.5%
                Special Limited Partners              48.5%
                Limited Partner                       50.0%
   
Notwithstanding the foregoing,  if with respect to any calendar year the Limited
Partner's  distributive  share  (computed  on the  same  basis  as that  used in
preparing  IPA's  Federal  income tax return) of income  (loss) plus one-half of
such partner's  distributive  share of long-term  capital gains exceeds the cash
distributions  referred to above, IPA must distribute an additional amount equal
to such excess to the Holders of the Participation Interests.


                                      S-13
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

9. Cash Distributions (continued)

In 1996,  1995 and 1994,  net  operating  revenues,  as defined  in the  Limited
Partnership  Agreement,  amounted to  $8,342,911,  $9,857,034  and  $10,212,572,
respectively.  At December 31, 1996,  1995 and 1994,  IPA accrued  distributions
amounting to $10,482,594,  $10,406,432,  and $10,503,794,  respectively of which
$5,241,297,  $5,203,216 and $5,251,897,  respectively,  are distributable to the
Holders of Participation  Interests. At December 31, 1996, distributions payable
include  the 1996 and 1995  accrued  distribution  payable  to the  General  and
Special Limited Partners.

10. Income Taxes

IPA has  obtained a ruling from the  Internal  Revenue  Service that IPA will be
classified as a partnership for Federal income tax purposes, and has received an
opinion of tax counsel  that IPA, as a  partnership,  will not be subject to any
Federal income taxes,  and that each holder of  Participation  Interests will be
treated for Federal  income tax purposes as if he were a limited  partner of IPA
to the extent of his proportionate interest in the Limited Partnership Interest.
Each  partner  of IPA and each  holder of  Participation  Interests  at any time
during the taxable year of IPA must take into account his distributive  share of
all items of IPA's income,  gain, loss,  deduction or credit,  without regard to
whether such partner or holder of  Participation  Interests has received or will
receive any distributions from IPA.  Accordingly,  no provision for income taxes
has been made in the  accompanying  Statements of Income.  The Internal  Revenue
Service is examining  the  partnership  return (Form 1065) filed by IPA for year
ended  December 31, 1989. As of March 28, 1997,  no revenue  report has yet been
issued.

Net income for Federal income tax purposes was to $8,914,978,  $10,406,432,  and
$10,579,711, for the years ended December 31, 1996, 1995 and 1994, respectively,
as  compared  with the net income of  $8,452,069,  $9,331,341,  and  $8,702,453,
respectively,  shown  in  the  Statements  of  Income.  The  differences  result
principally from the method of recognition of rental income,  and differences in
depreciation  expense resulting from differences in the basis of real estate for
tax and financial reporting purposes.


                                      S-14
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

11. Lease Obligations

IPA is obligated  under  certain non  cancelable  ground  leases  which  require
minimum  rentals  and in most  instances,  payments  for real  estate  taxes and
certain other expenses.  Certain of the leases contain renewal options.  Minimum
annual rentals exclusive of renewal options under such leases are:

               Years ending December 31:
                    1997                             $    394,000
                    1998                                  394,000
                    1999                                  394,000
                    2000                                  394,000
                    2001                                  394,000
                    Thereafter                          9,725,750
                                                     ------------
                                                     $ 11,695,750
                                                     ============

12. Gross Revenue From Real Estate

IPA earns rental income under leases principally with commercial tenants located
in its office  buildings.  Such leases  generally  provide for the tenant to pay
minimum  rentals  plus,  in certain  instances,  a portion of  increases in real
estate taxes, operating expenses and increases in the consumer price index based
on lease  escalation  clauses.  Office leases generally range from 5 years to 15
years and contain various renewal options. In addition,  IPA earns rental income
from retail  stores.  Such leases  generally  provide for minimum  rentals  plus
percentage rentals based on the store sales. Retail store leases generally range
from 1 to 5 years and contain various renewal options. All of the aforementioned
leases are accounted for as operating  leases.  Included in Gross  Revenues from
Real Estate for the years ended 1996, 1995 and 1994 are $1,745,212,  $1,946,428,
and  $1,608,734,   respectively,   representing  revenue  from  escalations  and
percentage  rentals,  and for the year  ended  1996  and  1995,  $1,400,000  and
$950,000,  respectively,  received in connection with lease  cancellations  with
former tenants.


                                      S-15
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

                    Notes to Financial Statements (continued)

12. Gross Revenue From Real Estate (continued)

The following is a schedule by years of minimum future rentals on  noncancelable
operating leases as of December 31, 1996, exclusive of amounts due as percentage
rent,  expense  escalations  or amounts that would be due from new leases or the
exercise of renewal options under existing leases:

               Years ending December 31:
                    1997                                     $  37,653,355
                    1998                                        31,506,219
                    1999                                        26,945,932
                    2000                                        17,090,800
                    2001                                        11,622,913
                    Thereafter                                  26,639,853
                                                             -------------
                         Total minimum future rentals        $ 151,459,072
                                                             =============

13. Contingencies

The company is involved in various  legal  matters and  disputes  arising in the
normal course of  operations,  the ultimate  outcome of which is not expected to
have a material effect on the financial statements.


                                      S-16
<PAGE>

                        Investment Properties Associates

                        (A New York Limited Partnership)

             Schedule III - Real Estate and Accumulated Depreciation

                                December 31, 1996

<TABLE>
<CAPTION>
            Co. A                 Col. B                         Col. C                 Col. D     
----------------------------------------------------------------------------------------------------
                                                        Initial Cost of Company    
                                                     ---------------------------      Improvements      
                                                                                      Capitalized   
                                                                   Buildings and      Subsequent to  
         Description             Encumbrances          Land        Improvements        Acquisition   
----------------------------------------------------------------------------------------------------
<S>                             <C>                <C>                <C>                  <C>     
Raymond Commerce Building,                       
   (leasehold) Newark, New                                        $   7,220,632     $      690,650 
   Jersey                                                                         
59 East Van Buren Building,                                                       
   Chicago, Illinois                               $   692,284        1,780,158            801,988 
Midland Savings Building,                                                         
   Midland, Texas                                      593,787        4,354,441            286,307 
One La Salle Building,                                                            
   Chicago, Illinois                                 2,968,499       13,359,878          3,165,105 
360 No. Michigan Building                                                         
   (leasehold), Chicago,                                              5,442,873          2,003,607 
   Illinois                                                                       
73-1/3% Interest in 6 North                                                       
   Michigan Avenue Building,                                                      
   Chicago, Illinois                                 1,830,012        2,521,979          1,287,252 
1440 Broadway, Building                                                           
   New York, New York            $  16,442,428       4,938,421       10,864,525          6,053,799 
One North Dearborn                                                                
   Building*, Chicago,                               5,289,594       13,359,927          6,025,273 
   Illinois                                                                       
261 Fifth Avenue, Building                                                        
   New York, New York               10,307,810         987,731        8,695,910          7,146,009 
Marbridge Building, New                                                           
   York, New York (a)                4,000,000       2,765,881        1,877,196          1,366,643 
Mojud Building, Long Island                                                       
   City, New York                                      346,514          643,526            459,575 
Edgewood and Bellway                                                              
   Shopping Centers,                                   447,893                                     
   Houston, Texas                                                                 
570 Broad Street Building                                                         
   Newark, New Jersey                                  502,032        5,937,404          1,549,324 
24 Commerce,  Federal Trust                                                       
   Building, Newark, New               467,070         398,864        1,994,319            213,697 
   Jersey                                                                         
245 Fifth Avenue Building,                                                        
   New York, New York                9,097,250         679,520        2,080,700          6,994,411 
                                 -----------------------------------------------------------------
Totals                           $  40,314,558     $22,441,032    $  80,133,468     $   38,043,640 
                                 =================================================================
<CAPTION>

                                                 Col. E                                   Col. F            Col. G       Col. H
                               -----------------------------------------------------------------------------------------------------
                                            Gross Amount                                                              Life on which
                                  at Which Carried Close of Period                                                     Depreciation
                               ---------------------------------------                                                  in Latest
                                                      Buildings                                                          Income  
                                                        and                             Accumulated      Date of      Statements is
                                       Land         Improvements         Total          Depreciation    Construction    Computed   
                               -----------------------------------------------------------------------------------------------------
<S>                                <C>             <C>               <C>              <C>                   <C>            <C>    
Raymond Commerce Building,                                                                                                         
   (leasehold) Newark, New                         $   7,793,366     $ 7,793,366        $ 7,110,335         1930           29.3   
   Jersey                                                                                                                         
59 East Van Buren Building,                                                                                                       
   Chicago, Illinois               $   692,284         2,582,146       3,274,430          2,384,252         1931           24.3   
Midland Savings Building,                                                                                                         
   Midland, Texas                      349,087         2,717,362       3,066,449          3,066,449         1959           34.3  
One La Salle Building,                                                                                                            
   Chicago, Illinois                 2,968,499        16,524,983      19,493,482         14,272,871         1930           29.3   
360 No. Michigan Building                                                                                                         
   (leasehold), Chicago,                               7,446,480       7,446,480          6,841,785         1923           24.3   
   Illinois                                                                                                                       
73-1/3% Interest in 6 North                                                                                                       
   Michigan Avenue Building,                                                                                                      
   Chicago, Illinois                 1,830,012         3,809,231       5,639,243          3,207,612         1893           19.3   
1440 Broadway, Building                                                                                                           
   New York, New York                4,938,421        17,248,439      22,186,860         13,477,550         1925           24.3   
One North Dearborn                                                                                                                
   Building*, Chicago,               5,289,594        19,385,200      24,674,794         17,065,605         1903           19.3   
   Illinois                                                                                                                       
261 Fifth Avenue, Building                                                                                                        
   New York, New York                  987,731        15,841,919      16,829,650         11,909,903         1928           24.3   
Marbridge Building, New                                                                                                           
   York, New York (a)                2,765,881         3,243,839       6,009,720          2,617,899         1907           19.3   
Mojud Building, Long Island                                                                                                       
   City, New York                      346,514         1,103,101       1,449,615            878,939         1916           19.3   
Edgewood and Bellway                                                                                                              
   Shopping Centers,                      --                                --                              1957           24.3   
   Houston, Texas                                                                                                                 
570 Broad Street Building                                                                                                         
   Newark, New Jersey                  502,032         7,486,728       7,988,760          4,916,542         1962           34.3   
24 Commerce,  Federal Trust                                                                                                       
   Building, Newark, New               398,864         2,208,016       2,606,880          2,146,410      1906, 1962        20.3   
   Jersey                                                                                                                         
245 Fifth Avenue Building,                                                                                                        
   New York, New York                  679,520         9,075,112       9,754,632          5,813,927         1923           24.3   
                                   ----------------------------------------------------------------                              
Totals                             $21,748,439     $ 116,465,922    $138,214,361        $95,710,079                               
                                   ================================================================                               
</TABLE>

* Formerly State-Madison Building.

The answer to Column H, "Date Acquired," is December 4, 1969 for all real estate
except 245 Fifth Avenue  where the fee title to land and building was  purchased
on April 1,  1983  and 570  Broad  Street  where  the fee  title to the land was
purchased  on March 15,  1994 (IPA had  acquired a  leasehold  interest  in both
properties on December 4, 1969).


                                      S-17
<PAGE>

                        Investment Properties Associates
                        (A New York Limited Partnership)

       Schedule III - Real Estate and Accumulated Depreciation (continued)

                                December 31, 1996


(a)  Amounts shown  represent 50% of amounts  applicable to a tenancy in common,
     in which IPA has an undivided one-half interest.

(b)  Reconciliation of "Real Estate and Accumulated Depreciation":

                                                Year ended December 31,
                                      -----------------------------------------
                                           1996          1995          1994
                                      -----------------------------------------
Investment in Real Estate            
Balance at beginning of year           $141,282,613  $138,759,013  $136,653,653
Abandonment of real estate               (4,183,692)         --            --
Improvements and additions                2,438,279     3,827,196     2,959,386
Fully depreciated assets written
   off during the year                   (1,322,839)   (1,303,596)     (854,026)
                                       ----------------------------------------
Balance at end of year                 $138,214,361  $141,282,613  $138,759,013
                                       ========================================

Accumulated Depreciation
Balance at beginning of year           $ 97,003,567  $ 94,819,779  $ 91,846,096
Additions charged to costs
   and expenses                           3,447,071     3,487,384     3,827,709
Less amounts applicable to
   abandonment of real estate            (3,417,720)         --            --
Less amounts applicable to fully 
   depreciated assets written off
   during the year
                                         (1,322,839)   (1,303,596)     (854,026)
                                       ----------------------------------------
Balance at end of year                 $ 95,710,079  $ 97,003,567  $ 94,819,779
                                       ========================================

The  aggregate  cost of real  estate  assets for  Federal  income  tax  purposes
amounted to $132,590,090, $134,841,652 (1995), and $131,238,635 (1994).


                                      S-18
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                         INVESTMENT PROPERTIES ASSOCIATES


                                             /s/ Irving Schneider
                                         By: ----------------------------------
                                             Irving Schneider
                                             General Partner

Dated:  April 15, 1997

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.


/s/ Irving Schneider
-----------------------------------------      General Partner,
Irving Schneider                                 Principal Executive,
                                                 Financial and
                                                 Accounting Officer


MINLYN, INC.                                   General Partner


By: /s/ Irving Schneider
-----------------------------------------
    Irving Schneider
    President



HELMSLEY-NOYES COMPANY, INC.                   General Partner



By: /s/ John Trainor
----------------------------------------
    John Trainor
    Senior Vice President